EMBARGOED UNTIL 00:01 HRS GMT Tuesday 3rd June 2008

The Time is Now:

how world leaders should
respond to the food price
crisis
3 June 2008

From food prices to food crises

High food prices are creating a silent tsunami threatening to plungeevery continent into
hunger. World Food Programme, 22 April 2008
For farmers, higher food prices should help us, but instead they make our lives harder.
Bob Atanga, a small farmer in a household in Nyariga, near Bolgatanga, Upper East Region,
Ghana, that consumes more than it can produce

I used to make breakfast for my two children before setting off for work as a street vendor but
increases in food prices mean my children now go without their morning meal - Judith Alexandre,
Carrefour-Feilles district of Port-au-Prince, Haiti

Global food prices are up 83 per cent compared with three years ago.1 The resulting food
price crisis constitutes an unprecedented threat to the livelihoods and well-being of millions
of rural and urban households who are net food buyers. Around the world, Oxfam
International and many of its partners have seen soaring prices force people to eat less food
or less nutritious food and drive poor households to cut back on health care, education, and
other necessities. Women and childrens nutritional levels are particularly vulnerable, as
women often put mens consumption before their own.
Oxfam estimates that current food price levels constitute an immediate threat to the
livelihoods of around 290 million people living in countries most vulnerable to food price
increases.2 Such vast numbers dwarf those affected by even the largest natural disasters,
such as the 2004 Asian tsunami.
The current food price crisis occurs against a backdrop of continuing hunger and
vulnerability for millions. Persistent hunger affects 854 million people across the world, a
number that means we are off-track in meeting the target set by the world community in
2000 of reducing hunger by half before 2015.3 According to the UNs World Food
Programme (WFP), the number of food emergencies has increased from an average of 15 per
year during the 1980s to more than 30 per year since the turn of the millennium.4
Food prices are likely to remain high and volatile for years to come because of rising
production costs due to high oil prices, and rising demand for cereals, linked with the
growth in the biofuels sector and in consumer demand in emerging countries. In addition,
climate change is expected to lead to more unpredictable weather and climate-related
disasters, exacerbating volatility in yields and markets and undermining food availability
and the livelihoods of millions of people, especially in sub-Saharan Africa.5
Action is urgently needed to deal with the current crisis and to reduce the likelihood of
similar events in the future. But the crisis offers opportunities as well as threats. For decades,
low prices have punished the rural producers and agricultural workers who make up the
majority of the worlds poor people. Now high prices could reverse that trend, but only if
the right policies and institutions are in place to allow poor farmers and agricultural
labourers to benefit.
Unfortunately, at local, national, and global levels, the right policies and institutions are not
yet in place. In many poor countries, mechanisms for regulating food markets and
promoting agricultural investment were scrapped under so-called structural adjustment
programmes pushed by the World Bank and the International Monetary Fund. The results?
Less support for small farmers, and more instability in agricultural markets.
The food price crisis represents an enormous challenge to the leadership and legitimacy of
the worlds multilateral institutions, but is also a genuine opportunity to deliver long-
overdue reforms to the food and agriculture system. Those countries with the resources and
power to deliver such reforms should take the lead, as they have done in trying to avert a
global financial crisis. The scale of what is possible when the political will exists is
breathtaking: the US Federal Reserve and European Central Bank have injected well over $1
trillion into the financial system in the past six months.6 The amount Oxfam estimates is
needed in immediate assistance for the poorest populations in 53 developing countries
deemed most vulnerable to current price levels is miniscule in comparison: just $14.5
billion.7
This briefing note sets out a series of steps, both short- and medium-term, to deal with the
current food crisis, and to put in place the reforms required to prevent future repetitions.

Provide immediate aid to prevent hunger and

malnutrition
The provision of immediate food aid is vital to prevent hunger and malnutrition amongst
affected populations. Oxfam welcomes the $755 million extra funding received recently by
the WFP, which allows the programme to maintain its operations at their 2007 level.
However, changing the nature of food aid is as important as increasing its volume.
International food aid, provided in kind by donor countries, has often contributed to
dependency on food imports through the dumping of cheap food, which undermines local
food production. International assistance should do just the opposite and support local

2 The Time Is Now, Oxfam Briefing Note, June 2008

economies. This is why Oxfam promotes local purchases for food aid as well as providing
cash directly to poor people instead of food, when appropriate.
Providing cash for locally- and regionally-produced food is also better value for money,
given the high fuel costs of transportation from rich countries. The OECD estimates that an
extra $750m a year could be released if rich countries gave food aid as cash rather than in
kind.8
But the response to this crisis must go far beyond food aid. Oxfam recommends establishing,
or scaling up, national-level social protection schemes such as minimum income guarantees,
public work programmes, and direct assistance to vulnerable groups and affected
populations. This should include the provision of food, cash, and agricultural inputs, but
also fiscal measures aimed at protecting peoples purchasing power (e.g. reduction of VAT
on staple foods). Governments and employers should also ensure that wages should be
living wages and that they keep pace with the increased cost of living. Income support and
food aid programmes must be implemented in a way that minimises the burden on
womens time. It is also essential to develop village grain banks and similar mechanisms
that support the local availability and affordability of food, regardless of market
fluctuations.
Depleted global grain stocks now reduced to an historical low, equivalent to 55 days of
world consumption make the world, particularly food-importing countries, extremely
vulnerable to any supply shock. More such shocks are expected.

Box 1. Scaling up humanitarian programmes and safety nets

In Afghanistan, Oxfam has started an emergency food- and cash-for-work programme to
increase access to food and other basic items for the most vulnerable people. However, the
intervention is coming under pressure, as the current crisis has pushed many families not
previously considered at risk into the vulnerable category.

In Haiti, Oxfam is developing short-term responses to respond to high food prices,

including school canteens and community soup-kitchens in Port-au-Prince and Jacmel,
and is scaling up existing cash-for-work activities in Port-au-Prince.

The Government of Niger is implementing a national food security and nutrition action
plan, which includes subsidised sales of cereals and cash-for-work schemes. The plan
receives multi-year support from key donor governments.

Countries dependent on food imports must reconstitute some form of food reserve in the
months to come in order to reduce fluctuations on local markets and to improve food
availability for food deficit areas and populations. This would support local food production
and trade if planned and managed properly. National grain reserves could be replaced by
regional reserves when appropriate (e.g. in East Asia or West Africa) and complemented by
innovative mechanisms, such as hedging, insurance, and other risk-management strategies.
Peoples livelihoods need to be protected through humanitarian assistance and safety nets in
order to prevent hunger and malnutrition. The poorest developing countries need
international support to provide such protection. Last year, the world leaders meeting at the
G8 summit called for greater investment in social protection in developing countries. It is
now time for them to turn their words into action.

3 The Time Is Now, Oxfam Briefing Note, June 2008

Support agriculture
The crisis caused by higher food prices is in part the result of decades of neglect of farming
in poor countries. The lack of investment in agriculture has exacerbated food insecurity in
the worlds poorest countries, and has left them exposed to the impact of global food price
rises. Rural households at risk from food shortages have nothing to fall back on when prices
rise beyond their means.
Ramping up agricultural production in major grain-exporting countries may provide
temporary respite to the food price spike, this is not enough. Firstly, it does nothing to tackle
the systemic causes of food insecurity in the worlds poorest nations that make them
vulnerable to higher prices in the first place. Secondly, addressing the issue of agricultural
development in low-income countries offers a critical opportunity to make a significant dent
in global poverty that should not be missed. Three-quarters of the worlds poor people still
live in rural areas, most of them on small farms. Many of the poorest countries are still
heavily dependent on agriculture for income and jobs.
Contrary to the claims of the big is beautiful school of economists, there are also strong
efficiency arguments for investing in the developing worlds 400 million smallholder
farmers. Their smallholdings often show higher productivity per area than their larger
counterparts.9 In addition, such farmers usually spend more on locally manufactured goods
and services. In countries economically dependent on agriculture, this is one factor that
contributes to the potential for agriculture to kick-start their economic development.
History shows the importance of agriculture in this process: as the UKs Department for
International Development has concluded, No poor country has ever successfully reduced
poverty through agriculture alone, but almost none have achieved it without first increasing
agricultural productivity.10 Small farms can also provide other vital services such as
preserving biodiversity and conserving water.
Despite these arguments for smallholder agriculture, complacency on the part of donors and
governments in an era of low prices was part of the reason behind a dramatic decline in
investment in the sector in many developing countries. International aid to agriculture
almost halved between 1980 and 2005.11 Although new pledges have since been made by
some donors,12 the scale of the challenge far outweighs the amount of money currently on
the table, with the aid budget for agriculture currently totalling around $4bn.13 That amount
is dwarfed by the support showered by the rich countries of the OECD on their own
agricultural sectors, which in 2006 stood at an estimated $125bn a year in direct payments to
farmers.14
Meanwhile, developing country governments have fallen behind on investing in agriculture.
In 2005, only six out of 24 African governments had met their 2003 commitment to spend ten
per cent of their budgets on agriculture.15 If all African governments were to meet the ten
per cent target, an extra $5bn would be released for agriculture.16
New money needs to be matched by new commitments to improve the quality of
agricultural spending. To effectively reduce peoples vulnerability to hunger, investment
needs to reach the most marginalised rural groups: smallholders, landless labourers,
nomadic pastoralists, and women. Such investment needs to encompass a comprehensive
set of agriculture policies, at a minimum ensuring access to and control of land and water,
providing infrastructure, investing in research and development backed by extension and
training services, and providing finance and credit to producers. Policies need to pay
particular attention to the circumstances of female producers, who may require investment
in household technologies such as energy and water in order to reduce the time spent on

4 The Time Is Now, Oxfam Briefing Note, June 2008

fetching water and firewood and other household chores, and to facilitating their
participation in agricultural production and marketing.
Much attention has been given in recent debates to the potential of science and technology to
achieve productivity increases in developing countries. Improving agricultural science and
technology has a vital role, particularly in drought-prone areas, but agricultural research
and development budgets in developing countries are far below those in the developed
world.17 However, enhancing agricultural production in a way that brings sustainable
development to the worlds poorest people will take more than a technology fix. For
technology to be appropriate, farmers need to be involved in its development, and extension
and training services need to reach the poorest rural communities. Female farmers benefit
from only five per cent of agricultural extension services worldwide, despite the fact that
women are responsible for the majority of household food production on most continents.18

Box 2. Supporting production at the local level

Zimbabwe seed fairs: Peoples capabilities can be strengthened during and immediately
after food emergencies, for example by supporting seed fairs to encourage the planting of
traditional crops best suited to the environment, in order to kick-start local food
production. Oxfam has found that giving farmers vouchers to buy seeds at fairs offers
them greater choice than simply handing out seed packages. Oxfam held 37 seed fairs in
partnership with local organisations in Masvingo and Midlands provinces in Zimbabwe
in 200405, bringing together producers, seed merchants, extension agents, and local
people, who were given vouchers to pay for their own choice of seed. The rich diversity
of 21 crops and 51 varieties included species that were previously threatened with
extinction. Many of these traditional crops are cheaper and more tolerant of marginal
conditions than high-yielding varieties. Some 23,000 households benefited directly
through buying seeds.
Ethiopia cereal banks: In Holeta in the central highlands of Ethiopia, where in 2002 most
families lived on less than $1 a day, local farmers were efficient producers of millet but
the price it commanded was barely enough to cover their production costs. So the
community established a cereal bank into which producers deposit their harvest and
from which they draw corresponding payments. Today, farmers enjoy a reliable store of
grain all year round, sell into the market when the price is high, and no longer need to
purchase seed.

There is no global blueprint for agriculture. New interventions must be developed locally, in
close consultation with women and farmers groups and civil society organisations.
However, more proactive state support is often necessary to ensure delivery of agricultural
services and inputs (including extension services) where it is most needed, improve storage
and marketing systems, and protect and improve access to land, especially where these
functions have been dismantled in recent decades. Governments and donors must also
support womens access to and control of assets, goods, and services, as well as their voice
in agricultural policy-making.

5 The Time Is Now, Oxfam Briefing Note, June 2008

Stop adding fuel to the fire by pushing biofuels
Demand for biofuels has risen rapidly over the past few years, primarily as a result of
mandatory targets for biofuels production and consumption19 and associated subsidies and
support measures in industrialised countries. But using food crops to produce transport
fuels is a hugely inefficient use of agriculture. The amount of grain required to produce
enough ethanol to fill the tank of an SUV is enough to feed a human being for an entire
year.20
The OECD has estimated that between 2005 and 2007 almost 60 per cent of the increase in
consumption of cereals and edible oils was due to biofuels.21 As well as diverting food crops
into fuel production, biofuels also compete with food production for agricultural land,
water, and inputs such as fertilisers.
Increasing demand for biofuels is therefore having a direct impact on the price of food: the
International Food Policy Research Institute (IFPRI) has estimated that biofuels explain 30
per cent of recent food price inflation.22 IFPRI also points out that support to biofuels, on
which OECD countries are estimated to have spent $1315bn last year, acts as a food tax
that is felt most keenly by the poor people who spend a higher proportion of their incomes
on food.23
Countries are justifying the pursuit of biofuels on the grounds that they offer a means to
reduce emissions from transport and improve energy security. But there is mounting
scientific evidence that biofuel mandates are actually accelerating climate change by driving
the expansion of agriculture into critical habitats such as forests and wetlands. Meanwhile,
far safer and more cost-effective means to reduce both emissions from transport and
dependency on foreign oil are available.
Governments should therefore stop adding fuel to the fire through their biofuels policies.
They must dismantle current subsidies and tax exemptions for biofuels and urgently rethink
existing mandates that reduce access to food. There must be a freeze on the implementation
of all further mandates.

Help poor countries get a fair deal from trade

Over the past three decades, the productive capacity and regulatory institutions of poor
countries have been seriously undermined by the dumping of rich country farm products,
barriers to northern markets and the unilateral opening and deregulation of developing
country agricultural markets.24
The current price spike has brought the weakened state of much developing country
agriculture into sharp relief. Most vulnerable have been those countries (such as Haiti see
box 3) that have prematurely slashed tariffs, cut support to agriculture, and become
increasingly dependent on food imports. Those that retained a greater degree of state
involvement (for example in marketing) and tariff protection have found it easier to absorb
the impact of the price shock.
Some governments have reacted to the price shock by restricting or banning exports. This
may make sense in terms of easing domestic needs, but it has serious consequences for
other, often more vulnerable countries. If large producers restrict exports, they will
significantly restrict supply on world markets, and so force up prices for food importing
countries, who are among the worlds poorest.

6 The Time Is Now, Oxfam Briefing Note, June 2008

 Box 3. The impact of forced liberalisation
The case of Haiti, which is now facing riots due to food shortages, illustrates the
problems that arise from rich country interference in local markets. In 1995, a rapid
liberalisation programme imposed by the World Bank and the IMF cut import tariffs on
rice from 50 per cent to three per cent, and the country was flooded by cheap, subsidised
rice imports from the USA. Urban consumers benefited for a while from cheaper rice, but
national rice production plummeted: from near self-sufficiency in 1990, Haiti is today
forced to import 80 per cent of the rice it consumes, just as world prices have doubled.
More than half of the population is malnourished, and more than 80 per cent of the rural
population live below the poverty line.

Source: Rigged Rules and Double Standards (Oxfam International, 2002) and World
Development Indicators (www.worldbank.org/data/onlinedatabases/onlinedatabases.html).

However, the implications for multilateral trade rules and the Doha round are complex, and
claims by EU and US trade negotiators and the World Bank25 that concluding the Doha
Round of trade talks at the World Trade Organisation (WTO) is a solution to the current
food price crisis should be treated with great scepticism.
Trade rules are long term and largely irreversible, and must protect poor people in times of
both high prices and low. As prices and other factors shift, it is vital that developing
countries retain the policy space they need to protect poor people whether producers or
consumers. For example, governments may choose to lower tariffs during periods of high
prices, but need to retain the ability to raise them again, should prices subsequently collapse
(as they have after most previous commodity booms).
This is not to argue that developing countries should necessarily pursue self-sufficiency. The
optimum degree of market openness and food dependency depends on a number of factors,
including the structure of the economy, the level of foreign exchange reserves, the
opportunities to increase productivity, or a countrys long-term development strategies. In
successful countries such as South Korea, Malaysia, and Indonesia, for example, smallholder
development strategies were underpinned by government use of tariffs to stabilise domestic
prices (protecting floor prices for farmers as well as ceiling prices for consumers) and
thereby encourage investment.26
Unfortunately, there is a temptation for trade negotiators to ignore such nuances and use the
food price crisis in order to whip up momentum for a quick deal. But any agreement based
on what is currently on the table at the WTO is likely to undermine, rather than strengthen,
developing country agricultural systems, and is unlikely to solve the current crisis, for two
main reasons.
Firstly, current proposals do not adequately address the need for many developing
countries to retain the ability to protect rural livelihoods and ensure food security. Secondly,
even with the anticipated elimination of export subsidies, loopholes allow the USA and the
EU to maintain high levels of trade-distorting spending on agriculture, and therefore a
licence to continue dumping. Under current scenarios, the Doha Round is unlikely to oblige
either the US or EU to cut a single dollar from the subsidies it pays its farmers. While this
might not be seen as a priority in a period of high food prices, the resulting record farm
profits ought to provide an ideal opportunity for reform. The passage of the $289bn Farm
Bill in the USA in May and aggressive statements by European opponents of CAP reform27
suggest that opportunity is being squandered.

7 The Time Is Now, Oxfam Briefing Note, June 2008

Progress on agreeing new disciplines at the WTO on the use of food aid will also provide a
litmus test for rich countries willingness to reform. Beyond the WTO, regional trade
agreements have become a new example of rich countries double standards and threaten to
undo even the modest gains made possible by new multilateral trade rules. The EUs
proposals in its negotiations with its former colonies in the African, Caribbean, Pacific (ACP)
group, known as Economic Partnership Agreements (EPAs), go far beyond the requirements
of the WTO, and pose serious obstacles to the protection of small producers against sudden
import surges and unfair competition. Moreover, the attempt to introduce stricter patent
protection could become a serious barrier to innovation and access to improved seeds, both
of which are key to enabling smallholders to improve their yields and adapt to climate
change.
Rich countries should take this opportunity to reorientate their agricultural and trade
policies. Instead, recent declarations by some officials in the USA and in EU member states
suggest that the current spike in prices could be used as an opportunity to reverse the
modest pace of reform. Those in Europe have already proposed continuing the very model
of the Common Agricultural Policy that contributed to the current problems in the first place
and, were prices to decline in future, would perpetuate yet again a cycle of rich country
dumping and the undermining of agricultural markets for the poorest producers. Losing the
momentum for change created in the past few years would be a serious setback to efforts to
make trade fair, and would be a further blow to rich country credibility.

Get behind a new deal for global food and

agriculture policy
An unprecedented level of co-ordination is now required across the international agencies,
developing country governments, civil society organisations, and private sector bodies
involved in making food and agriculture policy. All relevant actors need to work together to
put in place a comprehensive, global plan of action that ensures immediate assistance but
which also develops a strategy for the long term. The UN system must play a leading role in
ensuring that this is implemented. The rapid establishment of the UN taskforce, with UN
agencies working in close conjunction with the World Bank and IMF, is welcome and will
need to act quickly to operationalise its plans.
A global plan of action is meaningless without the financial commitments to make it
happen. Too often promises of finance have been neglected. The Marrakech Decision, for
example, was a pledge made by developed countries in 1994 to compensate Least
Developed and Net Food Importing developing countries for the impacts of trade
liberalisation by financing food imports and cash and food aid. It has never been
implemented.
Additional financing is urgently needed to guarantee increased food and cash aid, cover
balance-of-payments deficits caused by rising import bills, and finance inputs for the coming
agricultural harvest. While the World Bank in particular, but also the IMF, have an
important role to play in delivering such financing options, they should do so without
imposing additional conditionalities, particularly as shocks, by their very nature, cannot be
predicted. IMF credit facilities such as the Exogenous Shocks Facility should be made more
widely available, at more concessional rates. Further and faster debt relief should also be
granted to countries suffering as a result of the crisis.

8 The Time Is Now, Oxfam Briefing Note, June 2008

In the long run, new financial commitments to the agricultural sector must be delivered in a
way that supports, and does not undermine, existing institutions and initiatives (such as the
Comprehensive Africa Agriculture Development Programme, or CAADP, a regional
initiative under way to support agricultural policy reform). The establishment of a separate
new Special Fund administered outside existing donor or government institutions may
divert attention and resources away from these initiatives. Rather, what is needed is to find
ways to ensure clear global co-ordination of financing efforts, which includes both food aid
and cash funding, and monitoring of all new financial flows, so that the global aid effort
focuses effectively on poverty and hunger and is both transparent and accountable. In the
poorest countries, aid needs to be delivered in a manner that supports country ownership
and plans, and which delivers long-term, predictable finance, channelled through
government budgets where possible.
Governments should also explore the potential for innovative financing solutions that raise
additional finance. Any new finance should be long-term and predictable, and should not
divert attention from the major aid effort that will also be needed.
Additional research and analysis will also be needed, particularly into areas such as the role
of financial markets. Financial instruments can play a role in reducing price volatility and
risk in agriculture. However, recent events have raised questions as to whether these
markets are in fact currently performing this role and, if so, to what extent.

Conclusion: the time is now

Unco-ordinated, unilateral responses by governments to the food price crisis are only to be
expected in the face of global inaction. But there is a better response. Collective action is
essential to devise solutions that are equitable and sustainable for the global population as a
whole. This crisis represents an enormous challenge for the worlds multilateral institutions,
but also a genuine opportunity to deliver long-overdue reforms to the food and agriculture
system.
If those institutions fail to rise to the challenge, the cost will be measured not just in lost lives
and human suffering, but in lost legitimacy. Rich country governments have shown their
readiness to intervene massively to safeguard financial markets. They must show the poor
nations and communities of the world that they are at least as determined to agree the
funding and structural reforms necessary to help hundreds of millions of poor and
vulnerable people who suddenly find themselves unable to put food on the family table.
Oxfam urges world leaders meeting at the FAO Special Summit and the G8 in June and at
the UN High-Level Meeting on the MDGs in September to consider the following proposals,
ensuring that short-term, immediate needs are guaranteed in the coming weeks, and that a
comprehensive plan for longer-term action is in place by the conclusion of the Millennium
Summit.

Recommendations for short-term action:

1. Governments, UN agencies, and NGOs must expand safety nets and scale up
humanitarian assistance to food-insecure people. Some 290 million people require
immediate assistance in food, cash, and other short-term measures to support their
incomes and food consumption. Oxfam estimates that $14.5bn is required to scale up
immediate assistance for these people alone.28

9 The Time Is Now, Oxfam Briefing Note, June 2008

 2. Donors and developing country governments should invest in increasing short-
term agricultural production, as well as long-term support to the sector (see below).
Donors should ensure that the emergency initiative of the UNs Food and
Agriculture Organisation (FAO) to guarantee Low-Income Food Deficit Countries
the inputs they need to boost domestic production is fully financed, but also support
existing programmes (such as Africas CAADP initiative) working to support
smallholder farmers, particularly women farmers, to increase productivity and
access markets.

3. Rich countries must stop adding fuel to the fire through their biofuel policies.
Subsidies and tax exemptions which incentivise the diversion of agricultural
production to fuel production should be dismantled, and there must be an
immediate freeze on the implementation of any further mandates. Existing mandates
that are contributing to reduced access to food should be urgently rethought.

4. Developed and developing countries should avoid resorting to trade measures that
exacerbate the crisis or undermine long-term development goals. Rich countries
should stop advocating for tariff reductions to be locked in. Export bans should be
avoided: while they may be an understandable response to protect domestic
consumers in the short term in the absence of global action to deal with higher food
prices, they can negatively affect net food importing countries and producers. Rich
countries should not use higher food prices as a pretext to stall on much-needed
reforms in their trade and agriculture policies. The EU and the USA should publicly
commit themselves to a profound reform of their agricultural policies. Rich countries
should also restate their commitment to a pro-development outcome of current trade
negotiations, such as the Doha Round and the EUs Economic Partnership
Agreements (EPAs).

5. Additional financial support must be made available for net food importing
countries facing balance-of-payments or fiscal crises due to food price rises.
Debt relief for Heavily Indebted Poor Countries (HIPCs) suffering as a result of
the food crisis should be speeded up. Indebted non-HIPC countries that are
affected should also be granted debt relief.
The IMF should ensure that Poverty Reduction and Growth Facility (PRGF)
augmentation is offered automatically and immediately to all countries that want
it, without additional conditionality.
The IMFs Exogenous Shocks Facility (ESF) should be made available with only
fiduciary conditions attached, and with improved concessionality, to countries
suffering budgetary as well as balance-of-payments problems.
The World Bank and the IMF should also offer emergency shock financing to
middle-income countries suffering from the food crisis, with only fiduciary
conditions attached.

6. Governments and international bodies such as the FAO and World Bank should
commission a study immediately to clarify the contribution of futures markets to
the price spike. Oxfam is calling for careful consideration of these concerns and for
appropriate responses.

10 The Time Is Now, Oxfam Briefing Note, June 2008

Recommendations for medium- and long-term action:
1. Developing countries dependent on food imports should be supported to
reconstitute some form of food reserve. In circumstances where national grain
reserves are inappropriate, regional reserves should be established, particularly in
regions with strong economic integration. These reserves could be administered
under the umbrella of existing regional economic unions or frameworks (e.g. the
Economic Community Of West African States (ECOWAS), Club du Sahel, Southern
African Development Community (SADC)).
2. Governments should invest in social protection programmes to enable people to
meet their basic needs, protect their livelihoods against risk, and enhance their social
status and rights. The cost of providing such social protection to the poorest people
in Africa would be around $30bn just three per cent of the amount injected so far to
ward off a potential global financial crisis.29
3. Donors and developing country governments must scale up their investments in
agriculture and rural development, ensuring that such investments deliver
sustainable agricultural growth with benefits for the most marginalised rural
populations. This requires not only a step-change in the amount of investment
delivered to the sector, but reforms to the ways in which it is targeted and
agricultural policy is made. Agricultural policy should not be decided as part of a
negotiation with an international financial institution or aid donor, but by a
countrys government, in consultation with its citizens, including farmers groups.
Before a government decides upon a major agricultural policy reform that is likely to
have a significant distributional impact, it should ensure that a full, ex-ante Poverty
and Social Impact Assessment has been carried out. New investments in the
agriculture sector need to take into account the climate change adaptation needs of
developing countries.
4. The food aid system must be reformed in order to eliminate tied food aid and to
ensure that international assistance does not undermine local production in recipient
countries. Although in-kind food aid may be essential in the short term to meet
immediate needs, the WFP must also help governments, local administrations, and
communities to establish prevention and mitigation mechanisms (e.g. grain banks,
grain reserves). The FAO, the International Fund for Agricultural Development
(IFAD), and the WFP must work together to support the design and implementation
of comprehensive strategies to fight hunger at country level. New rules are needed at
the WTO and in international humanitarian regulation to guarantee the effective use
of food aid and to prevent it being used to dump surplus farm produce:
Food aid should not be linked, either explicitly or implicitly, to commercial
transactions or services of the donor country.
The use of in-kind food aid should be limited to situations of acute local food
shortage and/or non-functioning local food markets, where regional purchase is
not possible. In other situations, food aid should be provided in cash form, to
purchase food locally or regionally.
Monetisation of food aid should be limited and replaced with cash donations, to
avoid displacement of local production or commercial imports.

11 The Time Is Now, Oxfam Briefing Note, June 2008

 5. Multilateral and regional trade agreements must include a meaningful reform of
current agricultural trade rules, in order to provide fair rules for poor countries and
producers.
The WTO text on agriculture should include provisions that provide real market
access for developing countries. In addition, it is important that the negotiations
deliver an outcome that allows developing countries to use trade defence
instruments such as the special products (SPs) and the Special Safeguard
Mechanism (SSM) to protect livelihoods and rural development. Furthermore,
the negotiations need to address the issue of overall trade-distorting subsidies in
rich countries.
The EU should offer ACP countries long-term options for trade in goods that
would include (i) adapting its unilateral preference schemes so that they further
open European markets and are made permanent, ensuring that no ACP country
is left worse off if it does not conclude an EPA; and (ii) renegotiation of any
aspect of the initialled EPAs and commitment to reduce the deals to the
minimum needed for WTO compliance.

6. Developing countries must be supported to plan for, and protect against, future
shocks. All future Poverty Reduction Strategy Papers (PRSPs) should develop
comprehensive anti-shock plans. The projected shocks should be based on historical
probability and scale of all recent shocks. A strong emphasis should be put on the
fiscal effects of shocks and the implications for MDG-related expenditures.

12 The Time Is Now, Oxfam Briefing Note, June 2008

Notes
1
As is now well established, price rises have been driven by a perfect storm of pressures, including
bad weather conditions, increased demand from fast-growing economies, population growth, demand
for biofuels, and high oil prices, which force up transport costs and fertiliser prices.
2
Based on an Oxfam estimate of the number of the poorest people living on less than $1 a day in 53
countries (49 Least Developed Countries (LDCs), Tajikistan, Zimbabwe, Occupied Palestinian
Territories and Kenya) considered as the most vulnerable to current food price rises. List of LDCs and
poverty data from the United Nations website, www.un.org/special-rep/ohrlls/ldc/list.htm, accessed 28
May 2008 and regional poverty estimates and national population data from World Bank (2007) 2007
World Development Indicators. Washington DC: World Bank.
3
Latest data which reflects figures for 2001-2003. FAO (2006) The State of Food Insecurity in the
World 2006. Rome: Food and Agriculture Organisation of the United Nations.
4
WFP website, http://www.wfp.org/aboutwfp/introduction/hunger_fight.asp?section=1&sub_section=1,
accessed 16 May 2008.
5
W.E. Easterling, P.K. Aggarwal, P. Batima, K.M. Brander, L. Erda, S.M. Howden, A. Kirilenko, J.
Morton, J.-F. Soussana, J. Schmidhuber, and F.N. Tubiello (2007) Food, Fibre and Forest Products.
Climate Change 2007: Impacts, Adaptation and Vulnerability, Contribution of Working Group II to the
Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F.
Canziani, J.P. Palutikof, P.J. van der Linden, and C.E. Hanson (eds) Cambridge University Press,
pp.273-313.
6
The US Federal Reserve has made $510bn available since December 2007
(http://news.bbc.co.uk/2/hi/business/7410874.stm), and the European Central Bank released $500bn
in the same month
(http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/19/ccom119.xml).
7
Oxfams calculation, based on the 290 million poorest people in the 53 countries considered most
vulnerable to food price rises requiring on average $50 per capita of assistance in 2008. This is a
conservative estimate that does not take into account transaction costs and would represent only 14
cents per capita per day.
8
E. Clay Food Aid and the Doha Development Round: Building on the Positive, ODI, February 2006.
9
Poulton, C., A. Dorward and J. Kydd (2005) The Future of Small Farms. Conference on the Future
of Small Farms, June 2005, Wye.
10
DFID, Growth and Poverty Reduction: The Role of Agriculture, December 2005.
11
http://www.odi.org.uk/publications/nrp/NRP114.pdf
12
The World Bank has announced a doubling of agricultural lending to Africa over the next year.
13
In 200506 the OECD DAC donors provided $3.1bn in assistance to agriculture, while the World
Bank lent $12bn to agriculture, forestry, and fisheries between 2002 and 2007.
14
OECD (2007) Producer Support Estimate, Agricultural Policies in OECD Countries.
15
http://www.africa-union.org/root/ua/Conferences/2008/avril/REA/01avr/Pamphlet_rev6.pdf
16
WFP Congressional testimony before the Senate Foreign Relations Committee, 15 May 2008.
17
In 2000, developing countries as a group invested one-ninth of the amount invested in agricultural
research and development by developed countries, as a proportion of their agricultural gross
domestic product (World Development Report 2008).
18
http://www.fao.org/worldfoodsummit/english/fsheets/women.pdf
19
i.e. legal obligations to produce or consume certain amounts of biofuels on an annual basis.
20
C. Runge and B. Senauer, How Biofuels Could Starve the Poor, Foreign Affairs, May/June 2007.
21
OECD, Rising Food Prices: Causes and Consequences, paper prepared for the DAC High Level
Meeting, 2021 May 2008.
22
See http://www.guardian.co.uk/environment/2008/feb/26/food.unitednations.

13 The Time Is Now, Oxfam Briefing Note, June 2008

23
R. Steenblik, Biofuels At What Cost? Government support for ethanol and biodiesel in selected
OECD countries, Global Subsidies Initiative, IISD, Geneva, 2007.
24
See, for instance, A Round for Free,
http://www.oxfam.org/en/files/bp76_dumping_roundforfree_050615.pdf.
25
See for example World Bank President Robert Zoellick at a press conference, 2 April 2008: If ever
there was a time to cut distorting agricultural subsidies and open markets for food imports, it must be
now., EU trade negotiator Peter Mandelson and US trade negotiator Susan Schwab made remarks to
the same effect in Bloomberg Television interviews 19 May 2008.
26 M. Stockbridge (2006) Agricultural Trade Policy in Developing Countries During Take-Off, Oxfam
research report.
27 see for example International Herald Tribune, 19 May 2008, Rise in food price sharpens argument
about EU farm policy. "The solution to the crisis is not, first of all, through free trade," said the French
agriculture minister, Michel Barnier, rejecting the position promoted by pro-market countries like
Britain and Denmark as a response to rising food prices. Barnier said that the food crisis highlighted
the need for the EU's so-called Common Agricultural Policy, or CAP, which he called a cornerstone of
the Continent's food security.
28
Oxfams calculation. The 290 million poorest people in the 53 most affected countries require on
average $50 per capita of assistance in 2008. This is a conservative estimate that does not take into
account transaction costs and would represent only 14 cents per capita per day.
29
Oxfams calculation, based on 298 million people living on less than $1 a day in sub-Saharan
Africa, requiring as an average $100 per capita per year. This is a conservative estimate that does not
take into account transaction costs and would represent only 27 cents per capita per day. Sources:
the United Nations website, www0.un.org/millenniumgoals/docs/MDGafrica07.pdf, accessed 28 may
2008

Oxfam International June 2008

This paper was written by Arabella Fraser and Frederic Mousseau. Oxfam acknowledges the assistance of
Robert Bailey, Sam Bickersteth, Gonzalo Fanjul, Carlos Galian, Duncan Green, Richard King, Javier Perez, Liz
Stuart and Samar Verma, amongst others. It is part of a series of papers written to inform public debate on
development and humanitarian policy issues.
The text may be used free of charge for the purposes of advocacy, campaigning, education, and research,
provided that the source is acknowledged in full. The copyright holder requests that all such use be registered
with them for impact assessment purposes. For copying in any other circumstances, or for re-use in other
publications, or for translation or adaptation, permission must be secured and a fee may be charged. E-mail
publish@oxfam.org.uk.
For further information on the issues raised in this paper please e-mail advocacy@oxfaminternational.org.
The information in this publication is correct at the time of going to press.

14 The Time Is Now, Oxfam Briefing Note, June 2008

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Published by Oxfam International June 2008

Published by Oxfam GB for Oxfam International under ISBN 978-1-84814-677-8

16 The Time Is Now, Oxfam Briefing Note, June 2008